Texas and Louisiana Victims of Hurricane Ike Qualify for IRS Disaster Relief

Charles Infinger, Enrolled Agent

On Sept 18, 2008, the federal government declared portions of Texas and Louisiana a presidential disaster area qualifying for individual aid. The IRS is giving taxpayers in the affected areas until early 2009 to file certain returns and make certain tax payments.

The relief postpones the following deadline until Jan. 5, 2009:

- The requirement to file individual tax returns by Oct. 15, 2008;
- The requirement to file individual estimated tax returns, partnership returns, estate and trust returns, corporate tax returns, employment, and certain excise tax returns that either had an original or extended deadline on or after Sept. 7, 2008; and
- The requirement to make certain tax payments such as estimated payments.

IRS computer systems automatically identify taxpayers in the covered areas and apply the filing and payment relief. Affected taxpayers outside the disaster area must call the IRS Disaster Hotline at 1-866-562-5277 to request tax relief.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest or penalties that would otherwise apply.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster affects them so the IRS can provide appropriate consideration to their case.

Taxpayers in the affected area also have the option of claiming disaster-related casualty losses on their federal tax returns for 2008, or they can claim them for 2007 by filing an amended return.

For additional information on disaster assistance and emergency relief, visit www.irs.gov/businesses/small/article/0,,id=156138,00.html.

Charles Infinger is an Enrolled Agent for JK Harris and Company, LLC. He has been an EA since 2006. He is a member of the National Association of Enrolled Agents and the South Carolina Chapter of Enrolled Agents.

JK Harris reaching out to help recent hurricane victims

I have been through dozens of hurricane seasons, including Hurricane Hugo back in 1989, and I am still utterly amazed by the complete devastation these storms cause year in and year out. Every season we witness the loss of life, loss of homes, and financial hardship these hurricanes leave in their paths.

And despite these hardships, the unfortunate truth is that the victims who owed a tax debt before the hurricanes, still owe the tax debt afterward. I can understand the plight of these hurricane victims. And I would like to help as many as I can. That is why I have decided to offer our clients who are victims of hurricanes Gustav and Ike some flexibility when it comes to making payments to JK Harris.

I have learned in the past that in many instances, people in these situations have to make tough choices concerning the bills they were paying before these storms caused such a disruption to their lives and their pocketbooks. Sometimes they choose to stop paying for necessary services, like tax resolution, in order to put food on the table. That may lessen the financial crunch they are feeling, but it doesn’t lessen their tax debt. In fact, that debt will actually continue to grow and multiply with penalties and interest.

So, I am offering these victims, or survivors if you will, a way to extend their time to make payments to us and hopefully they won’t have to make those tough choices I mentioned. This will allow them some financial freedom during their time of recovery and still allow us to continue working on their tax issues and come to their needed resolution without interruption.

The last thing we want is for these survivors to be haunted by tax issues during this trying time. We want these survivors to focus on their recovery and let us handle their tax issues.

IRS launches “soft notice” Form CP 2057

Peter Hukki, Enrolled Agent

Recently, the IRS launched a new “soft notice” or Form CP 2057 as part of the effort to decrease the tax gap.  The tax gap is what the IRS calls the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time.  In other words, the tax gap is the approximately $300 to $350 billion in back taxes the IRS is working to collect.

Form CP 2057 is being sent out to warn taxpayers they may be underreporting their income.  The form is different from the CP 2000 letter used in the past, which proposes an adjustment and may ask the taxpayer to pay additional taxes.  CP 2057 tells the taxpayer to double-check certain parts of their return and to file an amended return (1040X) if necessary.

In the first issuance, 3,000 notices were sent out for tax year 2006.  In October, a second test will send out 31,000 forms for tax year 2007.  It is unknown exactly how the IRS selected taxpayers for this trial run of the CP 2057, but what is known is the notice allows taxpayers a chance to amend their returns if necessary.

If you should receive a CP 2057 in the mail, do not ignore it.  Double-check your return for the year of the notice and file an amended return if necessary.  Ignore the notice at your own risk! If you left information off of a previous year’s return you could get a follow up CP 2000 and chances are you could be faced with an audit.  However, the notice could work in your favor as well.  Chances are, you may have neglected to claim expenses on your Schedule C and you may be owed a refund.

Peter Hukki is an Enrolled Agent for JK Harris and Company, LLC. He has been an EA since 1974 and is also a practicing Tax Practitioner, completing tax returns for individuals, corporations, trusts, partnerships and estates.
corporations, trusts, partnerships and estates.

Identity theft can be a taxing situation

Charlie Jones, Sr. Vice President, Compliance, JKHarris and Company

Identity theft is growing in our nation at an increasingly alarming rate. Statistics from a survey commissioned in 2006 by the Federal Trade Commission show:

• Number of victims: 9.3 million
• Average out of pocket loss for victims: $371
• Hours spent per victim resolving the problem: 30

When you hear about identity theft, chances are you think of credit or bank accounts being the targets of such attacks.  What many taxpayers do not realize is identity thieves are beginning to falsify tax returns using stolen Social Security numbers.  In some cases, undocumented workers are reporting W-2 income using your Social Security number which leads the IRS to believe you have not reported all of your income when you file your income tax return.

According to the National Taxpayer Advocate, Nina Olsen, identity theft is a growing problem for taxpayers and the Internal Revenue Service.  Cases where a Social Security number was used by someone it did not belong to increased 129% from 2002 to 2006.  Olsen also said during the same period, cases where someone other than the taxpayer filed a tax return and claimed a refund increased 396%.  She went on to state it can take more than a year to determine which taxpayer is entitled to use a Social Security number.  She said the IRS is in the process of developing a centralized unit to deal with identity theft cases.  This would include a special hot line for taxpayers to use if they suspect they are victims of identity theft.  The hot line is scheduled to be available October 2008.

If you have already fallen victim to identity theft, you may have received a notice from the IRS stating you owe back taxes, penalties and interest“.  Contact JK Harris or a tax professional for assistance.  Chances are, you may be eligible to claim “Doubt as to Liability” through an Offer in Compromise

For more information on preventing identity theft, visit the IRS’ website at http://www.irs.gov/individuals/article/0,,id=136421,00.html or http://www.irs.gov/individuals/article/0,,id=136199,00.html.